Question 1

A Limited Liability Partnership (LLP) is designed to protect innocent partners from malpractice or negligence claims resulting from the acts of another partner.

Accepted Answer

A) True 
 B)False

Question 2

Even if partners devote their time and services to their partnership, their salaries are not expenses on the income statement.

Accepted Answer

A) True 
 B)False

Question 3

When a new partner is admitted, all parties usually must agree to the admission.

Accepted Answer

A) True 
 B)False

Question 4

Conklin plans to leave the CAP Partnership. The recorded value of his capital account is $48,000. The remaining partners Arthurs and Preston agree to pay Conklin $40,000 cash and Conklin accepts. The partners share income and loss equally. Prepare the general journal entry to record the withdrawal from the partnership.

Accepted Answer

Conklin, Capital……………………………………

Question 5

Pat and Nicole formed Here & There as a limited liability company. Unless the member owners elect to be treated otherwise, the Internal Revenue Service will tax the LLC as:

Accepted Answer

A)  An S corporation. 
B)  A C corporation. 
C)  A non-taxable entity. 
D)  A joint venture. 
E)  A partnership. 
A)  An S corporation. 
B)  A C corporation. 
C)  A non-taxable entity. 
D)  A joint venture. 
E)  A partnership.

Question 6

Farmer and Taylor formed a partnership with capital contributions of $200,000 and $250,000, respectively. Their partnership agreement calls for Farmer to receive a $70,000 per year salary. The remaining income or loss is to be divided equally. If the net income for the current year is $135,000, then Farmer and Taylor's respective shares are:

Accepted Answer

A)  $67,500; $67,500. 
B)  $130,000; $5,000. 
C)  $106,140; $28,860. 
D)  $90,000; $45,000. 
E)  $102,500; $32,500. 
A)  $67,500; $67,500. 
B)  $130,000; $5,000. 
C)  $106,140; $28,860. 
D)  $90,000; $45,000. 
E)  $102,500; $32,500.

Question 7

In a partnership agreement, if the partners agreed to an interest allowance of 10% annually on each partner's investment, the interest allowance:

Accepted Answer

A)  Is ignored when earnings are not sufficient to pay interest. 
B)  Can make up for unequal capital contributions. 
C)  Is an expense of the business. 
D)  Must be paid because the partnership contract has unlimited life. 
E)  Legally becomes a liability of the general partner. 
A)  Is ignored when earnings are not sufficient to pay interest. 
B)  Can make up for unequal capital contributions. 
C)  Is an expense of the business. 
D)  Must be paid because the partnership contract has unlimited life. 
E)  Legally becomes a liability of the general partner.

Question 8

Mesner's and Sanchez's company is organized as a partnership. At the prior year-end, Mesner's equity balance was $258,000 and Sanchez's was $212,000. For the current year, partnership net income is $125,000 ($75,000 allocated to Mesner and $50,000 allocated to Sanchez); withdrawals are $77,000 ($40,000 for Mesner and $37,000 for Sanchez). Compute the total partnership return on equity and the individual partner return on equity ratios.

Accepted Answer

Total partnership return on equity = Net

Question 9

Hewlett and Martin are partners. Hewlett's capital balance in the partnership is $64,000, and Martin's capital balance $61,000. Hewlett and Martin have agreed to share equally in income or loss. Hewlett and Martin agree to accept Black with a 25% interest. Black will invest $35,000 in the partnership. The bonus that is granted to Black equals:

Accepted Answer

A)  $5,000. 
B)  $2,500. 
C)  $6,667. 
D)  $3,333. 
E)  $0, because Black must actually grant a bonus to Hewlett and Martin. 
A)  $5,000. 
B)  $2,500. 
C)  $6,667. 
D)  $3,333. 
E)  $0, because Black must actually grant a bonus to Hewlett and Martin.

Question 10

________ means that partners can commit or bind the partnership to any contract within the scope of the partnership business.

Accepted Answer

The answer of ________ means that partners can commit or...

Question 11

Design Services is organized as a limited partnership, with Miko Toori as one of its partners. Miko's capital account began the year with a balance of $35,000. During the year, Miko's share of the partnership income was $7,500, and Miko received $4,000 in distributions from the partnership. What is Miko's partner return on equity?

Accepted Answer

A)  10.2% 
B)  22.7% 
C)  19.5% 
D)  20.4% 
E)  21.4% 
A)  10.2% 
B)  22.7% 
C)  19.5% 
D)  20.4% 
E)  21.4%

Question 12

A partnership may allocate salary allowances to the partners reflecting the relative value of services provided.

Accepted Answer

A) True 
 B)False

Question 13

Wright, Bell, and Edison are partners and share income in a 2:5:3 ratio. The partnership's capital balances are as follows: Wright, $33,000, Bell $27,000 and Edison $40,000. Edison decides to withdraw from the partnership, and the partners agree not to revalue the assets upon Edison's retirement. The journal entry to record Edison's June 1 withdrawal from the partnership if Edison is paid $40,000 for his equity is:

Accepted Answer

A)  Debit Edison, Capital $40,000; credit Cash $40,000. 
B)  Debit Wright, Capital $20,000; Debit Bell, Capital $20,000; credit Cash $40,000. 
C)  Debit Wright, Capital $20,000; Debit Bell, Capital $20,000; credit Edison, Capital $40,000. 
D)  Debit Edison, Capital $40,000; credit Wright, Capital $20,000; credit Bell, Capital $20,000. 
E)  Debit Cash $40,000; credit Edison, Capital $40,000. 
A)  Debit Edison, Capital $40,000; credit Cash $40,000. 
B)  Debit Wright, Capital $20,000; Debit Bell, Capital $20,000; credit Cash $40,000. 
C)  Debit Wright, Capital $20,000; Debit Bell, Capital $20,000; credit Edison, Capital $40,000. 
D)  Debit Edison, Capital $40,000; credit Wright, Capital $20,000; credit Bell, Capital $20,000. 
E)  Debit Cash $40,000; credit Edison, Capital $40,000.

Question 14

Reno contributed $104,000 in cash plus equipment valued at $27,000 to the RD Partnership. The journal entry to record the transaction for the partnership is:

Accepted Answer

A)  Debit Cash $104,000; debit Equipment $27,000; credit RD Partnership, Capital $131,000. 
B)  Debit Cash $104,000; debit Equipment $27,000; credit Common Stock $131,000. 
C)  Debit Cash $104,000; debit Equipment $27,000; credit Reno, Capital $131,000. 
D)  Debit Reno, Capital $131,000; credit RD Partnership, Capital $131,000. 
E)  Debit RD Partnership, Capital $131,000; credit Reno, Capital $131,000. 
A)  Debit Cash $104,000; debit Equipment $27,000; credit RD Partnership, Capital $131,000. 
B)  Debit Cash $104,000; debit Equipment $27,000; credit Common Stock $131,000. 
C)  Debit Cash $104,000; debit Equipment $27,000; credit Reno, Capital $131,000. 
D)  Debit Reno, Capital $131,000; credit RD Partnership, Capital $131,000. 
E)  Debit RD Partnership, Capital $131,000; credit Reno, Capital $131,000.

Question 15

A partner can withdraw from a partnership by any of the following means except:

Accepted Answer

A)  Selling his/her interest to another person for cash. 
B)  Selling his/her interest to another person in exchange for assets. 
C)  Receiving cash from the partnership in the amount of his/her interest. 
D)  Receiving assets from the partnership in the amount of his/her interest. 
E)  Close the business and liquidate the assets under the mutual agency principle. 
A)  Selling his/her interest to another person for cash. 
B)  Selling his/her interest to another person in exchange for assets. 
C)  Receiving cash from the partnership in the amount of his/her interest. 
D)  Receiving assets from the partnership in the amount of his/her interest. 
E)  Close the business and liquidate the assets under the mutual agency principle.

Question 16

When partners invest in a partnership, their capital accounts are debited for the amount invested.

Accepted Answer

A) True 
 B)False

Question 17

Peters, Chong, and Aaron are dissolving their partnership. Their partnership agreement allocates each partner an equal share of all income and losses. The current period's ending capital account balances are Peters, $54,000; Chong, $42,000; and Aaron, $(2,000). After all assets are sold and liabilities are paid, there is $94,000 in cash to be distributed. Aaron is unable to pay the deficiency. The journal entry to record the distribution should be:

Accepted Answer

A)  Debit Peters, Capital $54,000; debit Chong, Capital $40,000; credit Cash $94,000. 
B)  Debit Peters, Capital $54,000; debit Chong, Capital $42,000; credit Cash $96,000. 
C)  Debit Peters, Capital $53,000; debit Chong, Capital $41,000; credit Cash $94,000. 
D)  Debit Cash $94,000, debit Aaron, Capital $2,000, credit Peters, Capital $54,000, credit Chong, Capital $42,000. 
E)  Debit Cash $94,000; credit Peters, Capital $47,000; credit Chong, Capital $47,000. 
A)  Debit Peters, Capital $54,000; debit Chong, Capital $40,000; credit Cash $94,000. 
B)  Debit Peters, Capital $54,000; debit Chong, Capital $42,000; credit Cash $96,000. 
C)  Debit Peters, Capital $53,000; debit Chong, Capital $41,000; credit Cash $94,000. 
D)  Debit Cash $94,000, debit Aaron, Capital $2,000, credit Peters, Capital $54,000, credit Chong, Capital $42,000. 
E)  Debit Cash $94,000; credit Peters, Capital $47,000; credit Chong, Capital $47,000.

Question 18

Fontaine and Monroe are forming a partnership. Fontaine invests a building that has a market value of $250,000; the partnership assumes responsibility for a $75,000 note secured by a mortgage on the property. Monroe invests $100,000 in cash and equipment that has a market value of $55,000. For the partnership, the amounts recorded for the building and for Fontaine's Capital account are:

Accepted Answer

A)  Building $250,000; Fontaine, Capital $250,000. 
B)  Building $175,000; Fontaine, Capital $175,000. 
C)  Building $250,000; Fontaine, Capital $75,000. 
D)  Building $250,000; Fontaine, Capital $175,000. 
E)  Building $175,000; Fontaine, Capital $75,000. 
A)  Building $250,000; Fontaine, Capital $250,000. 
B)  Building $175,000; Fontaine, Capital $175,000. 
C)  Building $250,000; Fontaine, Capital $75,000. 
D)  Building $250,000; Fontaine, Capital $175,000. 
E)  Building $175,000; Fontaine, Capital $75,000.

Question 19

In closing the accounts at the end of a period, the partners' capital accounts are credited for their share of the partnership net income or debited for their share of the partnership loss.

Accepted Answer

A) True 
 B)False

Question 20

A partnership designed to protect innocent partners from malpractice or negligence claims resulting from acts of another partner is a(n):

Accepted Answer

A)  Partnership. 
B)  Limited partnership. 
C)  Limited liability partnership. 
D)  General partnership. 
E)  Unlimited liability company. 
A)  Partnership. 
B)  Limited partnership. 
C)  Limited liability partnership. 
D)  General partnership. 
E)  Unlimited liability company.

A Limited Liability Partnership (LLP) is designed to protect innocent partners from malpractice or negligence claims resulting from the acts of another partner.

Even if partners devote their time and services to their partnership, their salaries are not expenses on the income statement.

When a new partner is admitted, all parties usually must agree to the admission.

Pat and Nicole formed Here & There as a limited liability company. Unless the member owners elect to be treated otherwise, the Internal Revenue Service will tax the LLC as:

In a partnership agreement, if the partners agreed to an interest allowance of 10% annually on each partner's investment, the interest allowance:

________ means that partners can commit or bind the partnership to any contract within the scope of the partnership business.

A partnership may allocate salary allowances to the partners reflecting the relative value of services provided.

Reno contributed $104,000 in cash plus equipment valued at $27,000 to the RD Partnership. The journal entry to record the transaction for the partnership is:

A partner can withdraw from a partnership by any of the following means except:

When partners invest in a partnership, their capital accounts are debited for the amount invested.

In closing the accounts at the end of a period, the partners' capital accounts are credited for their share of the partnership net income or debited for their share of the partnership loss.

A partnership designed to protect innocent partners from malpractice or negligence claims resulting from acts of another partner is a(n):

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity Based Costing and Analysis

Cost Behavior Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Analyzing for Business Transactions

Filters

Exam 16: Partnership Accounting

A Limited Liability Partnership (LLP) is designed to protect innocent partners from malpractice or negligence claims resulting from the acts of another partner.

Even if partners devote their time and services to their partnership, their salaries are not expenses on the income statement.

When a new partner is admitted, all parties usually must agree to the admission.

Pat and Nicole formed Here & There as a limited liability company. Unless the member owners elect to be treated otherwise, the Internal Revenue Service will tax the LLC as:

In a partnership agreement, if the partners agreed to an interest allowance of 10% annually on each partner's investment, the interest allowance:

________ means that partners can commit or bind the partnership to any contract within the scope of the partnership business.

A partnership may allocate salary allowances to the partners reflecting the relative value of services provided.

Reno contributed $104,000 in cash plus equipment valued at $27,000 to the RD Partnership. The journal entry to record the transaction for the partnership is:

A partner can withdraw from a partnership by any of the following means except:

When partners invest in a partnership, their capital accounts are debited for the amount invested.

In closing the accounts at the end of a period, the partners' capital accounts are credited for their share of the partnership net income or debited for their share of the partnership loss.

A partnership designed to protect innocent partners from malpractice or negligence claims resulting from acts of another partner is a(n):

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity Based Costing and Analysis

Cost Behavior Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Analyzing for Business Transactions

Filters